Gold Is A 'Barbarous Relic' But These Are 'Barbarous Times'

[This article originally appeared on Sprott's Thoughts and is republished here with permission.]

At around $1,200 per ounce, gold has remained relatively steady over the last year and a half. Buying in physical gold markets has helped prevent further slides.

India in particular has been a major purchaser of physical gold. In 2009, the Indian government made headlines by purchasing 200 tons of gold from the IMF and Indian savers have been major buyers of gold on international markets.

Jayant Bhandari emigrated from India at age 36. Since then, he has kept a close eye on India’s economy and markets.

Earlier this year, he made a prescient call in Sprott’s Thoughtsthat the Indian stock market was likely to come down.

What is Jayant’s take on India’s demand for gold, and what does it mean for us?

Jayant sees gold becoming much more important in North America and Europe going forward, mirroring its role in India’s troubled economy.

Jayant writes:

People in India buy gold as a store of value. In my view, they don’t care about appreciation. In fact, they may not mind losing part of their purchasing power. They are desperately attempting to secure some of what they have.

Why are Indians turning to gold?

Individuals in India are recognizing that real yields from stocks, bonds, and real-estate will likely be negative. Gold offers a store of value that pays no yield, but when real yields are negative, gold becomes competitive.